Democratic Health Reform Will Rebate up to $4.9 Billion Back to Consumers in Excessive Health Premiums

The new regulation announced today is part of the so-called ‘medical-loss ratio’ provisions contained in the Democratic-passed health reform law. These provisions require that most insurance companies spend at least 80 to 85 percent of consumers’ premiums on health care, instead of on excessive advertising, CEO bonuses, and other administrative costs not related to the quality of health care.

Miller said the benefits to consumers from this provision are now at risk from Republican leaders in Washington who have pledged to overturn the new health care law.

“Repeal this?” said Miller, a co-author of the Affordable Care Act.  “Republicans in Washington have pledged to repeal the health care law. If they succeed, they will be taking money right out of the pocket of millions of average Americans. They might think that’s a good idea but I certainly don’t. So let’s just be very clear about what’s at stake when Republicans call for the repeal of the new health care law.

“Today’s announcement is good news for millions of Americans who are overcharged for their health insurance premiums. The regulation will help ensure that Americans’ health insurance premiums go to provide medical care, not excessive CEO pay, advertisements, or corporate profits,” said Miller. “These regulations are vital especially in light of some insurance companies raising premiums by double-digits while at the same time reporting billions in profits. Americans struggling to keep up with rising premiums need to be assured that their hard-earned dollars are going to provide care.  

“But make no mistake about it -- repealing the health reform law will take money directly out of consumers’ pockets.”

Miller and other House Democrats fought to include strong rules in health reform to ensure that premiums paid by Americans and businesses actually go toward providing medical care. 

Beginning in 2011, insurance companies will report how they spend the premium dollars they collect. As part of the Affordable Care Act, insurance companies in the individual market and small group market will be required to spend at least 80 percent of the premiums they collect directly on medical care or quality improvement – 85 percent for the large-group market. 

HHS says that 74.8 million Americans will be covered by these protections.